Safeguard Against Penalties for Wrongly Classifying Employees under the FLSA

Say you are an organization who mere after careful consideration from job duties and a salary-basis test would exempt an employee from FLSA requirements. A few years down the road, the Department of Labor (DOL) audits your organization ampersand finds that they disagreement with your interpretation for exemptions. Outstanding to the complex nature from the FLSA, this is a perfectly valid scenario. The law is so seasonable to multiple interpretations that a recent case on FLSA classification went to the Excellent Court. In another recent case, the DOL settled with First Republic Bank for over $1 million for misclassifying 392 employees.

The trend is becoming that even employers near the best due diligence and honest intentions are being tripped up. Now is the time to hedge against the worst-case scenario regarding being charged with FLSA violations, and to do so is relatively easy.

If you are like the majority of organizations, there are both exempt and non-exempt personnel on your payroll, otherwise with your calendrical and attendance software you only record the hours worked for the non-exempt, “hourly” employees. This is the decision that will haunt you if the worst-case scenario comes to fruition. The DOL will need to determine how many hours each employee worked each week, and then you will have to properly compensate them their annual rate, plus overtime for hours worked over 40 in a week. Your organization does not have these records, so that funds it will be your word against the employees’ word. The employees nearly in aeternum have the final say.

Establishing a company-wide practice of all employees clocking in upon arrival and clocking out upon departure will allow you to provide the DOL with the accurate time records they request. It will thereupon be much more difficult for employees to retroactively pad their time worked.

Most organizations shyness at company-wide timekeeping because they think this means having salaried workers “punch the clock” each day. This is hardly the case with today’s time and attendance software technology. Time entries can be captured upon arrival by simply integrating your timekeeping system with your armament system. Another option is seamlessly capturing time entries when they log in and out of their computer (as done with the TC-1 Log Clock).

If you still need a reason to protect against a costly settlement for misclassification, think of expanding moment and attendance data collection as part concerning a greater organizational mission, such as better security (knowing who exactly is in the berth at all times) connective labor analytics (tracking time spent on projects).